The U.S. Commerce Department has imposed new licensing requirements on exports of advanced AI chips, including Nvidia’s H20 and AMD’s MI308, to safeguard national and economic security. As a result, Nvidia’s shares dropped about 6 percent and AMD’s fell 7 percent in after-hours trading, Reuters news report said.
Nvidia will take a $5.5 billion charge due to new U.S. government restrictions on exporting its H20 artificial intelligence chip to China.
The H20 is Nvidia’s most advanced chip available for sale in China and has been central to its AI business in the region. Major Chinese tech companies like Tencent, Alibaba, and ByteDance had been increasing orders of the H20 to support booming demand for cost-effective AI models. While the H20 is not the fastest for training AI, it performs competitively in inference tasks, which are becoming a major part of the AI chip market.
However, the U.S. government is concerned that despite lower computing power, the H20’s high-speed connectivity could help build supercomputers in China. Restrictions on such exports have been in place since 2022. A Washington D.C. think tank claimed companies like Tencent and DeepSeek might already be violating those restrictions by using the H20 for training large AI models.
Nvidia said it was informed on April 9 that the H20 would require a license to be exported to China, and on April 14, it was told the rules would be indefinite. It remains unclear whether any licenses will be approved. The $5.5 billion charge covers inventory, purchase commitments, and related reserves tied to the H20.
Despite these challenges, Nvidia recently announced plans to build AI servers worth up to $500 billion in the U.S. over the next four years, partnering with companies like TSMC to support domestic manufacturing.
TelecomLead.com News Desk
